SCHEDULE 14A INFORMATION
Proxy statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional
Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FinishMaster, Inc.
(Name of Registrant as Specified In Its Charter)
FinishMaster, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(Set forth the amount on which
the filing fee is calculated and state how it was determined):
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
FINISHMASTER, INC.
4259 40TH STREET, S.E.
KENTWOOD, MICHIGAN 49512
(616) 949-7604
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
TO BE HELD APRIL 30, 1997
To the Shareholders of FinishMaster, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of
FinishMaster, Inc., an Indiana corporation (the "Company"), will be held at the
Hilton Hotel, 4747 28th Street, S.E., Grand Rapids, Michigan on Wednesday, April
30, 1997, at 10:00 a.m., local time, for the following purposes, all of which
are more completely set forth in the accompanying proxy statement.
1. Election of Directors. To elect seven (7) Directors for the ensuing
year;
2. Ratification of Auditors. To ratify and approve the selection of
Coopers & Lybrand, LLP, as auditors for the fiscal year ending
December 31, 1997.
3. Other Business. To transact such other business as may properly come
before the meeting.
In accordance with the Bylaws of the Company and a resolution of the Board
of Directors, the record date for the meeting has been fixed at March 17, 1997.
Only Shareholders of record at the close of business on that date will be
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose. A copy of our
Annual Report for the period ended December 31, 1996, is enclosed. The Annual
Report is not a part of the proxy soliciting material enclosed with this letter.
By Order of the Board of Directors
/s/ Andre B. Lacy
Andre B. Lacy, Chairman of the Board
and Chief Executive Officer
Indianapolis, Indiana
April 9, 1997
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE
AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FINISHMASTER, INC.
4259 40th Street, S.E.
Kentwood, Michigan 49512
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PROXY STATEMENT
---------------
This Proxy Statement is being furnished to the holders of common stock,
without par value (the "Common Stock"), of FinishMaster, Inc., an Indiana
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company to be voted at the Annual Meeting of
Shareholders to be held at 10:00 a.m., local time, on Wednesday, April 30, 1997,
at the Hilton Hotel, 4747 28th Street, S.E., Grand Rapids, Michigan, and at any
adjournment of such meeting. This Proxy Statement is expected to be mailed to
shareholders on or about April 9, 1997.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted "FOR" each of the matters described below and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Chief Financial Officer of the
Company written notice thereof at least twenty-four (24) hours before the
commencement of the meeting (Roger Sorokin, 4259 40th Street, S.E., Kentwood,
Michigan 49512), (ii) submitting a duly executed proxy bearing a later date, or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
The purpose of this Annual Meeting of Shareholders shall be to elect
Directors, to ratify the selection of the Company's auditors for the fiscal year
ended December 31, 1997, and to transact such other business as may properly
come before the meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Common Stock is the only voting stock of the Company. Holders of
record at the close of business on March 17, 1997, are entitled to one (1) vote
for each share of Common Stock held. As of March 17, 1997, there were
approximately 5,992,640 shares of the Company's Common Stock issued and
outstanding, and the Company had no other class of equity securities
outstanding. Holders of stock entitled to vote at the meeting do not have
cumulative voting rights in respect of the election of directors.
In an election of directors, each director is elected by a plurality of
the votes cast. Actions other than elections of directors are authorized by a
majority of the votes cast by the holders of shares entitled to vote thereon.
Although Indiana law and the Articles of Incorporation and Bylaws of the Company
are silent on the issue, it is the intent of the Company that proxies received
which contain abstentions or broker non-votes as to any matter will be included
in the calculation of the presence of a quorum, but will not be counted as votes
cast for or against the action to be taken on the matter.
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<PAGE>
Security Ownership By Principal Holders
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of March 17, 1997, by each
person who is known to the Company to own 5% or more of its Common Stock:
Number of Shares of
Name and Address of Common Stock
Beneficial Owner Beneficially Owned % of Class
---------------- ------------------ ----------
LDI AutoPaints, Inc.(1) 4,045,100(1) 67.5
54 Monument Circle
Indianapolis, Indiana 46204
Edgemont Asset Management 365,000 6.1
Corporation
140 East 45th Street
43rd Floor
New York, New York 10017
(1) LDI AutoPaints, Inc., an Indiana corporation ("AutoPaints"), is a
wholly-owned subsidiary of Lacy Distribution, Inc., an Indiana corporation
("Lacy"), and an indirect wholly-owned subsidiary of LDI, Ltd., an Indiana
limited partnership ("LDI"). LDI has two managing partners: LDI Management, Inc.
("LDIM"), its corporate managing general partner, and Andre B. Lacy, the
Chairman and Chief Executive Officer of the Company. AutoPaints, Lacy, LDI, LDIM
and Andre B. Lacy have jointly filed a Schedule 13D to report beneficial
ownership of the 4,045,000 shares held of record by AutoPaints. Effective
December 31, 1996, LDI transferred to AutoPaints 100 shares of the Company which
LDI had purchased on the open market in August, 1995. Andre B. Lacy,
individually, owns an additional 6,000 shares of the Company's Common Stock.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors may be changed
from time to time, as determined by the Board of Directors or shareholders of
the Company. The Board of Directors currently consists of seven members. Unless
otherwise directed, each proxy executed and returned by a shareholder will be
voted for the election of the following nominees to the Board of Directors, to
hold office until the next Annual Meeting or until their successors are elected.
In the event any nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board of Directors. Proxies will be voted
only to the extent of the number of nominees named. At this time, the Board of
Directors knows of no reason why any nominee may not be able to serve as a
director if elected. Directors are elected to serve until the next Annual
Meeting or until their successors are elected and qualified.
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<PAGE>
Security Ownership by Directors and Executive Officers
The following table sets forth information as of March 17, 1997 with
respect to the number and percentage of Common Stock beneficially owned by (i)
each director nominee, (ii) each Named Executive Officer (as defined below), and
(iii) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership
of Common Stock as of
March 17, 1997 (1)
----------------------------------------
Name of Director of Sole Voting & Shared Voting & Percentage
Beneficial Owner (1) Company Since Investment Power Investment Power of Class
---------------- ------------- ---------------- ---------------- --------
Director Nominees:
<S> <C> <C> <C> <C>
Andre B. Lacy 1996 6,000 4,045,100(2) 67.6%
Thomas U. Young 1996 --- --- *
Margot L. Eccles 1996 --- 4,045,100(2) 67.5%
William J. Fennessy 1996 400 --- *
Walter S. Wiseman 1996 --- --- *
Michael J. Siereveld 1993 49,650(3) 350 *
Peter L. Frechette --- --- --- *
Other Executive Officers:
Christopher R. Banner, --- 25,400(4) --- *
Vice President
Roger A. Sorokin, --- 23,000(5) --- *
Vice President - Finance
Robert H. Reynolds, Secretary --- --- --- *
All directors and executive --- 104,450 4,045,450(2) 68.3%
officers as a group (10)
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</TABLE>
* Beneficial ownership does not exceed one percent (1%)
(1) Based upon information furnished by the respective director nominees and
executive officers. Under applicable regulations, shares are deemed to be
beneficially owned by a person if he directly or indirectly has or shares
the power to vote or dispose of the shares and if he has the right to
acquire such power with respect to shares within 60 days. Accordingly,
shares subject to options are only included if exercisable within 60 days.
Includes shares beneficially owned by members of the immediate families of
the director nominees or executive officers residing in their homes.
(2) Includes all 4,045,100 shares of Common Stock held directly by AutoPaints.
Mr. Lacy, the Chairman and CEO of the Company, is a general partner of LDI,
the ultimate parent entity of AutoPaints. Mr. Lacy is also the sole
shareholder and the Chairman, President and Chief Executive Officer of LDI
Management, Inc., the corporate managing general partner of LDI ("LDIM"),
and he is the Chairman and Chief Executive Officer of AutoPaints. Ms.
Eccles serves as a director and as a Vice President of LDIM and as a
director of AutoPaints. Due to their positions with LDIM and AutoPaints,
Mr. Lacy and Ms. Eccles may be deemed to have voting and dispositive power
with respect to these shares, and therefore to own such shares beneficially
under applicable regulations.
(3) Includes 42,000 shares subject to stock options, which are currently
exercisable in accordance with their terms.
(4) Includes 22,550 shares subject to stock options, which are currently
exercisable in accordance with their terms.
(5) Consists of 23,000 Shares subject to stock options, which are currently
exercisable in accordance with their terms.
-3-
<PAGE>
The following information is furnished concerning the director nominees,
all of whom have been nominated by the Board of Directors.
Mr. Lacy (age 57) was elected Chairman of the Board of Directors and Chief
Executive Officer of the Company in July, 1996. Mr. Lacy is President, Chief
Executive Officer and Chairman of the Board of Directors of LDIM, the corporate
managing general partner of LDI. Mr. Lacy, individually, also serves as a
general partner of LDI. Mr. Lacy serves as President, Chief Executive Officer
and Chairman of the Board of Directors of Lacy, and he has served as Chairman of
the Board of Directors and Chief Executive Officer of AutoPaints since its
formation in April, 1996. Except for his positions with the Company and
AutoPaints, Mr. Lacy has served in these capacities for more than the previous
five years. Mr. Lacy also serves as a director of Tredegar Industries, Inc.,
Albemarle Corporation, IPALCO Enterprises, Inc., Herff Jones, Inc., The National
Bank of Indianapolis, and Patterson Dental Company. Mr. Lacy is the brother of
Margot L. Eccles.
Mr. Young (age 64) was named Vice Chairman of the Board of Directors of the
Company in July, 1996, and was subsequently elected President and Chief
Operating Officer of the Company effective July 24, 1996. Mr. Young has served
as a Vice President of LDIM and as President and Chief Operating Officer of
AutoPaints since June, 1996. From 1989 until May 31, 1996, Mr. Young served as
the World Wide Director of the Refinish Business for E.I. Dupont Co.,
Wilmington, Delaware.
Ms. Eccles (age 61) has served as a director of the Company since July,
1996. She has served as a director of LDIM and as its Vice President and
Assistant Secretary for more than the previous five years. Ms. Eccles also
serves as a director, Vice President and Assistant Secretary of Lacy, and she
has served as a director and Assistant Secretary of AutoPaints since its
formation in April, 1996. Ms. Eccles is the sister of Andre B. Lacy.
Mr. Fennessy (age 56) has served as the Treasurer and as a director of the
Company since July, 1996. He has served as a Vice President, Treasurer and Chief
Financial Officer of LDIM for more than the previous five years. Mr. Fennessy
also serves as a director and as the Vice President, Treasurer and Chief
Financial Officer of Lacy, and he has served as a director and Treasurer of
AutoPaints since its formation in April, 1996.
Mr. Frechette (age 59) has served as a director of the Company since
August, 1996. He has also served as Chairman of the Board, President, and Chief
Executive Officer of Patterson Dental Company, a distributor of dental supplies
and equipment based in St. Paul, Minnesota, for more than the past five years.
Mr. Siereveld (age 41) has served as Senior Vice President of the Company
for more than the previous five years. He was elected to the Board of Directors
of the Company in 1993.
Mr. Wiseman (age 51) has served as a director of the Company since July,
1996. He has served as a Vice President of LDIM and as President of Major Video
Concepts, Inc. ("MVC"), a wholesale distributor of videocassettes based in
Indianapolis, Indiana, and a wholly-owned subsidiary of Lacy, for more than the
previous five years. Mr. Wiseman has retired from such offices and retired from
employment of MVC effective March 31, 1997.
Except for Mr. Lacy and Ms. Eccles, no director or nominee for director is
related to any other director or nominee for director or executive officer of
the Company by blood, marriage, or adoption, and there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected.
THE DIRECTORS SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST AT THE
ANNUAL MEETING
Meetings and Committees of the Board of Directors
The management of the Company is under the direction of the Board of
Directors (the "Board"). At a meeting of the Board of Directors of the Company
held on October 31, 1996, the Board of Directors of the Company determined to
change the fiscal year of the Company from a fiscal year ending March 31 to a
fiscal year ending December 31. As a result of such determination, the period
covered by this proxy statement and the Company's most recent annual report on
Form 10-K, which was filed on or before March 31, 1997, is the transition period
from March 31, 1996 to December 31, 1996.
-4-
<PAGE>
During the period ended December 31, 1996, the Board met four (4) times
in addition to taking a number of actions by unanimous written consent. During
such period, no incumbent director of the Company attended fewer than 75% of the
aggregate of the total number of Board meetings and the total number of meetings
held by the committees of the Board of Directors on which he served.
The Board has established an Audit Committee, Compensation Committee
and an Executive committee. For the period ended December 31, 1996, all of the
members of the Board were appointed to the Audit Committee, with Walter S.
Wiseman serving as the Chair of such committee. The Audit Committee did not meet
in the period ended December 31, 1996. The Audit Committee recommends the annual
employment of the Company's auditors with whom the Audit Committee will review
the scope of audit and non-audit assignments, related fees, the accounting
principles used by the Company in financial reporting, internal financial
auditing procedures and the adequacies of the Company's internal control
procedures.
The Compensation Committee consisted of Margot L. Eccles (serving as
Chair), Peter L. Frechette and Mr. Wiseman for the period ended December 31,
1996. The Compensation Committee determines executive officer salaries and
bonuses and administers the Company's stock option plan. The Compensation
Committee did not meet during the period ended December 31, 1996.
The Executive Committee, whose members consist of Andre B. Lacy and
Thomas U. Young, in addition to such other duties as may be prescribed from time
to time by the Board, has and exercises, during intervals between the meetings
of the Board, all powers invested in the Board, subject to applicable legal
requirements. The Executive Committee did not meet in the period ended December
31, 1996.
The Board does not have a standing nominating committee.
Director Compensation
In the period ended December 31, 1996, the non-employee directors of
the Company were paid an annual retainer of $6,000, a board meeting fee of
$1,000 per meeting, a committee meeting fee of $750 per meeting, and a
telephonic board meeting fee of $250 per meeting. Directors of the Company who
are employees of FinishMaster, AutoPaints, Lacy, LDI, LDIM or their affiliates
do not receive compensation for their services as directors.
Compliance with Reporting Requirements
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), requires the Company's directors and executive officers and
beneficial owners of more than 10% of the Company's equity securities to file
with the Securities and Exchange Commission ("SEC") certain reports regarding
the ownership of the Company's securities or any changes in such ownership.
Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms that
they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for such persons, the Company believes that, during the period
ended December 31, 1996 and except as set forth below, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
with respect to Section 16(a) of the 1934 Act were complied with. Following his
election as a director, Mr. Frechette did not file on a timely basis an Initial
Statement of Beneficial Ownership of Securities on Form 3, but such form has
since been filed, reporting that Mr. Frechette owns no securities of the
Company.
-5-
<PAGE>
Remuneration of Executive Officers
The following table summarizes, for the Company's last two complete
fiscal years and the nine month period ended December 31, 1996, the compensation
of the persons who served as Chief Executive Officer of the Company during the
period ended December 31, 1996 and each of the other most highly compensated
executive officers of the Company who were serving as such at the end of such
period and whose salary and bonus compensation exceeded $100,000 for services
rendered in all capacities to the Company and its subsidiary during the most
recent fiscal period (collectively, the "Named Executive Officers"). With the
exception of Mr. Young, who serves as President and Chief Operating Officer of
the Company, employees of LDI who serve as officers of the Company serve without
compensation from the Company. See "Certain Transactions with Related Persons."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Securities All Other
Name and Fiscal Underlying Compen-
Principal Position Year Salary Bonus Options(5) sation(6)
------------------ ---- ------ ----- ---------- ---------
<S> <C> <C> <C> <C>
Andre B. Lacy...................... 1996(1) $ --- $ --- --- $ ---
Chief Executive Officer
Ronald P. White.................... 1996(1)(2) 58,846 --- --- 996
Chief Executive Officer 1996(3) 155,000 24,130 25,000 3,651
1995 127,000 48,260 --- 3,348
Thomas U. Young.................... 1996(1) 112,500(4) --- --- ---
President and Chief Operating 1996(3) --- --- --- ---
Officer 1995 --- --- --- ---
Michael J. Siereveld............... 1996(1) 123,750 --- --- 1,749
Senior Vice President 1996(3) 150,000 22,000 25,000 3,581
1995 110,000 44,000 --- 3,348
</TABLE>
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(1) Represents amounts paid in the nine-month period from April 1, 1996 through
December 31, 1996.
(2) By a letter dated July 22, 1996, Mr. White resigned as a director and as
President of the Company.
(3) Represents amounts paid in the fiscal year ended March 31, 1996.
(4) Represents sums paid by the Company to AutoPaints for services provided to
the Company by Mr. Young.
(5) Represents the number of shares for which options have been granted.
(6) Represents the Company's 25% match of up to 6% of employee deferrals of
currently earned income into the 401(k) Employee Savings Plan and any
profit sharing contributions made by the Company for eligible employees to
the 401(k) Employee Savings Plan at the rate of 1% of compensation.
-6-
<PAGE>
Stock Options Granted in Period Ended December 31, 1996
No options were granted to the Named Executive Officers during the period
ended December 31, 1996.
Aggregated Option Exercises in Period Ended December 31, 1996
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of In-the-Money
Shares Options at the Period Unexercised Options at
Acquired on Value ended the Period ended
Name Exercise (#) Realized ($) December 31, 1996 December 31, 1996 ($)(1)
---- ------------ ------------ ----------------- ------------------------
<S> <C> <C> <C> <C>
Andre B. Lacy --- --- --- $---
Ronald P. White --- --- 44,000(2) ---
Thomas U. Young --- --- --- ---
Michael J. Siereveld --- --- 42,000 ---
</TABLE>
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(1) Since the market value of the Company's Common Stock was $7.25 per share at
December 31, 1996, which price is lower than the option price of the Common
Stock, all of these outstanding stock options were "out of the money."
(2) All such options expired on October 22, 1996 in accordance with the terms
of the Company's stock option plan and Mr. White's stock option agreement
with the Company.
Compensation Committee Interlocks and Insider Participation
For the period ended December 31, 1996, the Compensation Committee of the
Board (the "Committee") consisted of Ms. Eccles, Mr. Frechette and Mr. Wiseman.
Mr. Lacy, the Company's Chief Executive Officer, is a member of the
Compensation Committee of Patterson Dental Company. Mr. Frechette, who is a
Director and member of the Company's Compensation Committee, is the Chief
Executive Officer of Patterson Dental Company.
Compensation Committee Report on Executive Compensation
Overview and Philosophy
The Committee is responsible for developing and making recommendations to
the Board with respect to the Company's executive compensation policies. In
addition, the Committee, pursuant to authority delegated by the Board,
determines on an annual basis the compensation to be paid to the Chief Executive
Officer and each of the other executive officers of the Company.
The objectives of the Company's executive compensation program are to:
_ Support the achievement of desired Company performance.
_ Provide compensation that will attract and retain superior talent and
reward performance.
_ Align the executive officers' interests with the success of the
Company by placing a portion of pay at risk, with payout dependent
upon corporate performance.
The executive compensation program provides an overall level of
compensation opportunity that is competitive with companies of comparable size
and complexity. The Committee will use its discretion to set executive
compensation where in its judgment external, internal or an individual's
circumstances warrant it.
-7-
<PAGE>
Executive Officer Compensation Program
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, and various benefits, including medical and deferred
compensation plans, generally available to employees of the Company.
Base Salary
Base salary levels for the Company's executive officers are competitively
set relative to other comparable companies. In determining salaries the
Committee also takes into account individual experience and performance.
Annual Incentive Compensation
The Company's annual incentive program for executive officers and key
managers provides direct financial incentives in the form of an annual cash
bonus to executives based on the Company's ability to create economic value.
Economic value is measured by the Company's ability to generate a return in
excess of the Company's cost of capital.
Specific individual performance was also taken into account in determining
bonuses, including meeting department goals, attitude, dependability,
cooperation with co-workers, and creativity or ideas that benefit the Company.
Stock Option Program
The stock option program is the Company's long-term incentive plan for
executive officers and key employees. The objectives of the program are to align
executive and shareholder long-term interests by creating a strong and direct
link between executive pay and shareholder return, and to enable executives to
develop and maintain a significant, long-term ownership position in the
Company's Common Stock.
The Company's stock option plan was adopted by the Company's Board of
Directors in November 1993 and was ratified by the sole stockholder on November
30, 1993. The stock option plan provides for the grant of both incentive stock
options intended to qualify for preferential tax treatment under Section 422 of
the Internal Revenue Code of 1986, as amended, and nonqualified stock options
that do not qualify for such treatment. The stock option plan authorizes a
committee of directors to award executive and key employee stock options. Stock
options are granted at an option price equal to the fair market value of the
Company's Common Stock on the date of grant, have ten year terms and can have
exercise restrictions established by the Committee. A total of 600,000 shares of
Common Stock have been reserved for issuance under the stock option plan.
Deferred Compensation
The Company's employees participate in the FinishMaster, Inc. 401(k)
Employee Savings Plan. The 401(k) plan is a "cash or deferred" plan under which
employees may elect to contribute a certain portion of their annual compensation
which they would otherwise be eligible to receive in cash. The Company has
agreed to make a matching contribution of 25% of the employees' contributions of
up to 6% of their annual compensation. Contributions must be made from current
or retained earnings of the Company. All full time employees of the Company or
its subsidiary who have completed one year of service are eligible to
participate in the plan. Participants are immediately 100% vested in all
contributions. The plan does not contain an established termination date, and it
is not anticipated that it will be terminated at any time in the foreseeable
future.
Benefits
The Company provides medical benefits to the executive officers that are
generally available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the SEC relating to executive
compensation, did not exceed 10% of salary for the period ended December 31,
1996.
-8-
<PAGE>
Chief Executive Officer
On July 22, 1996 Mr. White resigned as the Company's Chief Executive
Officer. His base salary for the period between April 1, 1996 and July 22, 1996
was $58,846.
The factors discussed under "Annual Incentive Compensation," above, were
also applied in establishing the amount paid to Mr. White as a bonus during such
period. Significant factors in establishing Mr. White's compensation were the
Company's ability to create economic value and general business development.
Andre B. Lacy served as the Company's Chief Executive Officer for period
ended December 31, 1996, having first been named to such position in July, 1996.
Mr. Lacy does not receive any compensation from the Company for his services as
a director and the Chief Executive Officer of the Company.
The Compensation Committee of the Company for the period ended December
31, 1996:
Margot L. Eccles
Peter L. Frechette
Walter S. Wiseman
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the period beginning March 31, 1994 and ending
December 31, 1996, with the cumulative total return on the CRSP Total Return
Index for the Nasdaq Stock Market (US Companies) (1) and the Nasdaq index of
Non-Financial Companies (2) over the same period, assuming the investment of
$100 in the Company's Common Stock, the Nasdaq U.S. Index and the Nasdaq
Non-Financial Index on February 23, 1994, and reinvestment of all dividends.
[Chart omitted]
2/23/94 3/31/94 3/31/95 3/31/96 12/31/96
------- ------- ------- ------- --------
FinishMaster 100 83 140 105 65
NASDAQ Stock market- US 100 94 105 142 159
NASDAQ Non-Financial 100 94 103 137 167
- ----------------------
(1) The CRSP Total Return Index for the Nasdaq Stock Market (US Companies)
is composed of all domestic common shares traded on the Nasdaq National
Market and the Nasdaq Small-Cap Market.
(2) Nasdaq index of non-financial companies.
-9-
<PAGE>
Certain Transactions With Related Persons
During the period between July 10, 1996 and December 31, 1996,
AutoPaints has made certain AutoPaints employees available to the Company to
perform certain managerial tasks. Accordingly, the Company paid $176,679 in the
aggregate to AutoPaints during the period ended December 31, 1996, in return for
the services of AutoPaints employees. Of such amount, $112,500 was paid in
connection with the services of Mr. Young as the Company's President and Chief
Operating Officer. Additionally, AutoPaints provides certain miscellaneous
services from time to time when requested by the Company.
Recent Developments
On December 20, 1996, the Company changed its corporate domicile from
the State of Michigan to the State of Indiana by merging with and into
FinishMaster, Inc., an Indiana corporation originally organized as a
wholly-owned subsidiary of the Company.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors proposes the ratification by the shareholders at
the Annual Meeting of the appointment of the accounting firm of Coopers &
Lybrand, LLP ("Coopers & Lybrand") as independent auditors for the fiscal year
ended December 31, 1997. A representative of Coopers & Lybrand is expected to be
present at the Annual Meeting with the opportunity to make a statement if [the
representative] he so desires. He will also be available to respond to any
appropriate questions shareholders may have.
Relationship with Independent Public Accountants
The firm of Ernst & Young, LLP ("Ernst & Young") served as auditors for
the Company for the fiscal year ended March 31, 1996. Effective July 10, 1996,
the Board of Directors of the Company replaced Ernst & Young as independent
auditors for the Company for the year ending March 31, 1997.
On the same date, the Board of Directors of the Company approved the
appointment of Coopers & Lybrand as independent auditors for the Company for the
period ended March 31, 1997, to replace the firm of Ernst & Young. The decision
to change auditors was recommended and approved by the Board of Directors of the
Company.
Ernst & Young's report on the Company's financial statements during the
two most recent fiscal years contained no adverse opinion or a disclaimer of
opinion, and was not qualified as to uncertainty, audit scope or accounting
principles. During the last two fiscal years and subsequent interim periods
preceding this change, there were no disagreements between the Company and Ernst
& Young on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Ernst & Young, would have caused it to make
a reference to the subject matter of the disagreements in connection with its
reports.
At a meeting of the Board of Directors of the Company held on October 31,
1996, the Board of Directors of the Company determined to change the fiscal year
of the Company from a fiscal year ending March 31 to a fiscal year ending
December 31. As a result of such determination, the period covered by this proxy
statement and the Company's most recent annual report on Form 10-K, which was
filed on or before March 31, 1997, is the transition period from March 31, 1996
to December 31, 1996.
RATIFICATION OF THE APPOINTMENT OF AUDITORS REQUIRES THAT THE VOTES CAST
(IN PERSON OR BY PROXY) AT THE ANNUAL MEETING OR AT ANY ADJOURNMENT THEREOF IN
FAVOR OF RATIFICATION EXCEED THOSE CAST AGAINST.
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<PAGE>
VOTE REQUIRED TO APPROVE MATTERS
A quorum for the meeting requires the presence in person or by proxy of
holders of a majority of the outstanding shares of the Common Stock of the
Company. Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspector(s) of election appointed for the meeting.
Abstentions, "broker non-votes" (i.e., where brokers or nominees indicate that
such persons have not received instructions from the beneficial owner or other
person entitled to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) and votes withheld will be
treated as present for purposes of determining the presence of a quorum, but
will not be counted as votes cast for or against the action to be taken on the
matter.
The election of each director requires a plurality of the votes cast.
Votes withheld will be deemed not to have been cast. The Company's shareholders
do not currently have the power to cumulate votes in the election of directors
by (i) multiplying the number of votes they are entitled to cast by the number
of directors for whom they are entitled to vote and (ii) casting the product for
a single candidate or distributing the product among two or more candidates.
SHAREHOLDER PROPOSALS
Any proposals which shareholders of the Company intend to present at the
next annual meeting of the Company must be received by the Company by December
2, 1997, for inclusion in the Company's proxy statement and proxy form for that
meeting.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Common Stock. In addition to solicitation by
mail, directors, officers, and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
Each Shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed return envelope.
Insofar as any of the information in this Proxy Statement may rest
peculiarly within the knowledge of persons other than the Company, the Company
relies upon information furnished by others for the accuracy and completeness
thereof.
By Order of the Board of Directors
/s/ Andre B. Lacy
Andre B. Lacy, Chairman of the Board
and Chief Executive Officer
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
REVOCABLE PROXY
FINISHMASTER, INC.
Annual Meeting of Shareholders
April 30, 1997
The undersigned hereby appoints Andre B. Lacy and Thomas U. Young, with full
powers of substitution, to act as attorneys and proxies for the undersigned to
vote all shares of capital stock of FinishMaster, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at the Hilton Hotel, 4747 28th Street, S.E., Grand Rapids, Michigan, on
Wednesday, April 30, 1997, at 10:00 A.M., local time, and at any and all
adjournments thereof, as follows:
1. The election as directors of all nominees listed below, except as marked to
the contrary
|_| FOR |_| VOTE WITHHELD
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name on the list below:
Andre B. Lacy
Thomas U. Young
Margot L. Eccles
William J. Fennessy
Walter S. Wiseman
Michael J. Siereveld
Peter L. Frechette
(each for a one year term expiring at the next annual meeting)
2. Ratification of the appointment of Coopers & Lybrand, LLP as auditors for
the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the listed propositions.
<PAGE>
This Proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the meeting, a proxy statement and an
Annual Report to Shareholders.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Date _____________________________, 1997
----------------------------------------
Print Name of Shareholder
----------------------------------------
Signature of Shareholder
[ ] Please check this box
if you intend to attend
the Annual Meeting of ----------------------------------------
Shareholders Print Name of Shareholder
----------------------------------------
Signature of Shareholder
Please sign as your name appears on the
envelope in which this card was mailed.
When signing as attorney, executor,
administrator, trustee or guardian,
please give your full title. If shares
are held jointly, each holder should
sign.
